EMF Publishes Quarterly Review of European Mortgage & Housing Markets Q2 2026 - The Global Edition Sharia and Sukuk Financing Tools Around the World
The European Mortgage Federation (EMF) is delighted to announce the publication of its Quarterly Review of European Mortgage & Housing Markets for the second quarter of 2026.
Produced in cooperation with the Federation’s national experts and, for the first time, with members of the International Secondary Mortgage Market Association (ISMMA), the Quarterly Review provides the latest short-term developments in mortgage and housing markets across the European Union (EU) and beyond.
Quarterly Focus
This special global edition is published in advance of the 10th edition of the World Bank Group’s Global Affordable Housing Conference, co-hosted by the EMF-ECBC in Brussels on 3-5 December 2026. It focuses on Sharia-compliant home financing, Sukuk and other specialised financing tools for housing markets, bringing European housing finance into dialogue with the experience of ISMMA members.
The Review examines how Sharia-compliant structures such as Murabaha, Ijarah and diminishing Musharakah provide alternatives to conventional mortgage lending, and how Sukuk can connect housing finance with capital-market funding. While Malaysia, Indonesia and Pakistan have developed substantial Islamic banking and Sukuk markets, Sharia-compliant home finance remains limited in most European markets, even though the global Sukuk market surpassed USD 1 trillion outstanding for the first time in 2025. The publication considers the legal, regulatory and funding factors that shape these markets, and how such instruments could complement established European funding channels, including covered bonds.
The edition opens with an introductory note from Yuji Date (ISMMA Chairman and Director General, International Affairs and Research Department, Japan Housing Finance Agency). It also features contributions from Farrukh Zaheer (Pakistan Mortgage Refinance Company) on how Sukuk can support mortgage refinancing, drawing on PMRC’s Musharakah-based structure, from Richard Kemmish on Sharia-compliant home finance in Europe and the regulatory and funding questions it raises, from Cagamas on how Malaysia has built an integrated Islamic housing-finance ecosystem, and from AlHuda Centre of Islamic Banking and Economics on Sukuk and European demand.
New in this Edition: ISMMA Country Contributions
For the first time, the Quarterly Review includes country contributions from ISMMA members. This edition features fact sheets for Armenia, Indonesia, Japan, Korea and Pakistan, while Tanzania has contributed to the survey on Sharia-compliant and specialised home financing. Together, these contributions illustrate how housing-finance systems at different stages of development are responding to a common set of challenges, from mobilising long-term funding to broadening access to home ownership.
Updates EMF Country Fact Sheets
As always, we include up-to-date national fact sheets offering a snapshot of mortgage market developments across the EMF country sample, extended in this edition to the participating ISMMA markets.
The country fact sheets highlight analytical commentary together with data tables on the following key indicators:
- Total outstanding residential mortgage lending;
- Regulation and Government intervention;
- Nominal house price indices;
- Mortgage interest rates; and
- Sharia-compliant and specialised home financing (market structure, regulation and funding).
Key highlights from the Q2 2026 Quarterly Review:
- Mortgage interest rates increased compared with the previous quarter in most European markets for which data is available, following a period of declining borrowing costs. Contributors linked this development to higher swap rates following geopolitical developments in the Middle East and to the ECB’s policy-rate increase in June 2026.
- Mortgage lending nevertheless remained resilient in most markets, and refinancing continued to support activity as fixed-rate periods agreed during the low-rate environment reached maturity.
- House prices continued to rise across much of Europe, although growth moderated in several markets and differences between market segments and regions became more apparent.
- Regulatory developments did not point in a single direction: several countries adjusted borrower-based measures to facilitate access to home ownership, others introduced more targeted macroprudential measures, and a number of governments placed greater emphasis on housing supply and affordability.
- Credit quality remained sound across most of the sample, with non-performing loan ratios for residential mortgages remaining low and, in several cases, continuing to decline.
- Sharia-compliant home financing remains a small segment in most European markets, although the United Kingdom, Germany and Spain show that such products can operate within national legal frameworks. Within the ISMMA, Malaysia, Indonesia and Pakistan have developed substantial Islamic banking and Sukuk markets. The contributions illustrate that there is no single model for developing these instruments.
The second quarter of 2026 shows European mortgage markets adjusting to a less favourable interest-rate environment from a position of relative strength. By bringing European and ISMMA experiences together, this global edition highlights both the diversity of housing-finance systems and the shared challenge of mobilising stable, long-term capital to support access to affordable housing.
CONTACT
Sage Douglas
Research and Data Adviser